What California laws are recognized in the Chocolate Bash Franchise Agreement?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
ll incur on termination of this Agreement as a result of Franchisee's default is difficult and the parties desire certainty in this matter and agree that the lump sum payment provided under this Section is reasonable in light of the damages for premature termination that Franchisor will incur. This payment is not exclusive of any other remedies that Franchisor may have including attorneys' fees and costs.
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- In recognition of the requirements of the California Franchise Investment Law, Cal. Corp. Code §§31000-31516 and the California Franchise Relations Act, Cal. Bus. And Prof. Code §§20000-20043, the Franchise Agreement for Chocolate Bash is amended as follows:
- ¡ The California Franchise Relations Act provides rights to Franchisee concerning termination or non-renewal of the Franchise Agreement, which may supersede provisions in the Franchise Agreement, specifically Sections 3.2 and 14.2.
- ¡ Section 14.2 (c)(iii), which terminates the Franchise Agreement upon the bankruptcy of Franchisee, may not be enforceable under federal bankruptcy law (11 U.S.C. Section 101, et seq.).
- ¡ Section 13.2 contains a covenant not to compete that extends beyond the expiration or termination of the Agreement; this covenant may not be enforceable under California Law.
- ¡ Paragraph 1 of this Addendum contains a liquidated damages clause.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, the Franchise Agreement recognizes the California Franchise Investment Law, Cal. Corp. Code §§31000-31516, and the California Franchise Relations Act, Cal. Bus. And Prof. Code §§20000-20043.
The California Franchise Relations Act provides franchisees with specific rights concerning the termination or non-renewal of the Franchise Agreement, which may supersede certain provisions in the agreement, specifically Sections 3.2 and 14.2. Additionally, Section 14.2 (c)(iii), which allows for termination of the Franchise Agreement upon the franchisee's bankruptcy, may not be enforceable under federal bankruptcy law (11 U.S.C. Section 101, et seq.).
Furthermore, Section 13.2, which contains a covenant not to compete that extends beyond the expiration or termination of the agreement, may not be enforceable under California Law. Paragraph 1 of the addendum to the franchise agreement contains a liquidated damages clause, which may be unenforceable under California Civil Code Section 1671.
The Chocolate Bash FDD also states that each owner of the franchise is required to execute a personal guaranty, which could jeopardize the marital assets of non-owner spouses domiciled in community property states such as California.